About Tax Structure in India
The Republic of India has got a tax structure, which is quite simplified as well as developed. The taxation system in India is featured with a 3 tier federal structure that comprises off the following:
- The Union Government
- The State Governments
- The Rural and Urban Local Bodies or Municipal Jurisdictions
- Central Excise Duty
- Customs Duty
- Sales Tax
- Service Tax
- Calling Tax
- Entertainment Duty
- Land Revenue (Generally levied on land, which is used for non-agricultural and agricultural purposes)
- Profession Tax
- Sales Tax (For intra-state goods' sale)
- Stamp Duty (Duty levied on property transfer)
- State Excise (Duty imposed on alcohol manufacturing)
- Consumption Tax
- Octroi Tax
- Property Tax
Changes in Tax Structure in India
Since the year 1991, the Indian tax system has undergone some significant changes. These changes were made in accordance with the country's W. T. O. commitments as well as the liberal financial policies. Some of the major changes in the structure of taxation in the nation are as follows:
- Lowering the tax on corporate income
- Reduction in the rate of excise duties as well as custom duties. Custom duty was reduced from the rate of 220 % in 1991 to 30 % in 2002.
- Toning up the administration of taxation
- Widening the base of tax
Tax Structure for Different Taxes in India
Following are the structure of taxes for some of the main taxes in the Republic of India:
Structure of Personal Income Tax
The below mentioned table provides information about the different slabs for the imposition of income tax:
|Sl. No.||Total Personal Income||Rate of Personal Income Tax|
|1||Up to INR. 50, 000||0.00%|
|2||INR. 50, 000 to INR. 60, 000||10.00%|
|3||INR. 60, 000 to INR. 1, 50, 000||20.00%|
|4||Above INR. 1, 50, 000||30.00%|
Structure of Corporate Income Tax
The imposition of such a tax varies from a domestic company to a foreign organization. Given below are the rates of corporate tax, which is levied on different companies:
a. Domestic Companies: Corporate Income Tax is levied at the rate of 35 % with an additional 5 % surcharge.
b. Foreign Organization (Including project offices or branch offices): Corporate Tax is calculated at the rate of 40 % with a 5 % surcharge.
However, an Indian registered organization that is a foreign company's subsidiary is considered to be a domestic company for the computation of corporate taxes.
Central Sales TaxPopularly known as C. S. T., this tax is levied on the manufactured items at the rate of 4 %.
Local Sales TaxGoverned by the tax legislation of respective states of the India Republic, Local Sales Tax or L. S. T. gets levied on any kind of sale, which takes place in a state. This tax generally goes up to 15 %.
Excise DutyFor most of the commodities, which are subject to the imposition of Excise Duty, the rate of tax ranges in between 0 % to 16 %. The duty on some of the items goes up to 32 %. Those goods are air conditioners, chewing tobacco, motor cars, pan masala, polyesters yarn, soft drinks and tyres.
Custom DutyBasic Custom Duty rates vary in between 0 % to 30 %.
Last Updated on 2/17/2012
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